EIS Association tells Chancellor now is the time to invest in Enterprise
The Enterprise Investment Scheme Association (EISA) is lobbying the Chancellor ahead of his first budget to ensure that private investors in start-up and growing businesses are encouraged to continue supporting this important part of the economy, particularly against the backdrop of the likely impact on mainstream business of the coronavirus.
The tax allowances available from investing under the Seed Enterprise Investment Scheme (SEIS), and the later stage Enterprise Investment Scheme (EIS) have seen £20 billion of private investors’ money go to create and drive the growth in over 27,000 businesses since the schemes started 25 years ago and the EISA is looking for the Chancellor to build on this with further enhancements in his budget statement.
“With the potential impact of the coronavirus on the economy still very unclear, the Chancellor has to make every effort to use whatever options he has to help maintain a growth agenda,” says Director General of the EISA, Mark Brownridge. “The EIS scheme has a strong track record in doing just that, and we are looking to him to address three key aspects in the scheme which we believe would provide an added impetus in attracting even more private investors.”
The wish list set out by the EISA sees an increased profile, a simplification of the administration, and an extension of the tax allowances all as key to accelerating private investment through the scheme:
• Increasing the amount individuals can invest, and ensuring the schemes continue is at the heart of the EISA message.
“We believe that increasing the threshold for EIS and SEIS investment, and potentially removing it all together, will encourage follow-on investments, and could help smooth the transition into non-tax-incentivised investments. Additionally, we need a commitment from the Government that the schemes will continue beyond 2025,” advises Mark Brownridge.
• Improving the user journey, with a belief that there is a compelling case for improving the administrative processes around authorising SEIS and EIS companies and granting tax relief for investors. The scheme rules are currently complex and need simplifying.
• Raising the profile of the advantages of the EIS scheme. “At present only about 10% of those earning in excess of £100,000 each year make use of the scheme, and much more can be done to raise the profile of EIS and SEIS both to companies seeking much needed equity finance including involving a far wider range of business support agencies such as LEPs, Universities and the IOD and to potential investors,” claims Lord Flight, Chairman of the EISA.
“This is a critical time for our economy,” says Mark Brownridge, “and we very much hope that the Chancellor will take on board our proposals as he prepares his announcements for next week”